Tax relief is working for economy
By Greg Moore
If a candidate for governor proposed a jobs program that would put more than 7,500 New Hampshire residents to work in just three months, cut the unemployment rate by half a point, and bring over 3,800 Granite Staters into the work force, how much would you think taxpayers would have to pay for this plan? Would you believe that it could even happen?
It might surprise you to know that’s just what happened in New Hampshire, and it didn’t cost the taxpayers of the state one red cent. In reality, it wasn’t about spending any more money from our wallets, but in letting us keep more of what we earn.
The secret sauce for this explosion in job growth over the past three months, the fastest our state has seen in over 32 years, has been the first reduction in business tax rates in over a generation. Giving employers a chance to keep more of their income has resulted in an explosion in job creation across the state.
New Hampshire has seemingly endless advantages: no state income tax, no sales tax and one of the healthiest and best educated workforces in the nation. A fly in the ointment, though, had been the state’s business tax rate, the third-highest in the country. That created a competitive disadvantage that undercut our ability to grow our economy and create jobs. When New Hampshire has a higher business tax than Massachusetts, something is clearly wrong.
Last year, providing tax relief for employers became Americans for Prosperity’s top priority. After leading efforts in the House and Senate, the Legislature included critical tax reduction in the state budget.
However, Gov. Maggie Hassan, who seldom lets clear economic thinking interfere with her ideological drive to grow government, chose instead to veto this common sense provision, calling the critical tax relief an “unfunded” “$90 million budget hole.” This statement only served to underscore the governor’s economic ignorance.
Supported by emails to our 44,000 members statewide, over 30,000 phone calls to other free market supporters, over 20,000 doors knocked on as well as television and online advertisements, Americans for Prosperity let the governor know that the time for tax relief was now.
It wasn’t long after that the Legislature got Hassan to sign into law a budget putting critical tax relief in place. In fact, the final package actually accelerated this tax relief.
Despite Governor Hassan’s warnings, not only did this tax-cutting state budget not create a budget hole, but it brought $49 million in higher tax revenue from business taxes than planned in just the first eight months of the fiscal year.
In fact, in March alone, the largest month for business tax revenues, the state saw a $13.6 million spike in tax revenue above initial estimates.
While increasing revenues are sign of a growing economy, the tremendous growth in job creation is the most important aspect of this tax relief. Almost immediately after going into effect, thousands of our friends and neighbors were able to get jobs, as employers, given an opportunity to keep more of their own money, took the initiative to add new positions.
Job growth appears across all sectors of the private economy in New Hampshire, meaning that companies from across the spectrum have responded to tax reduction and brought on new workers. That’s the sign of an economy gaining steam.
Later this year, Gov. Hassan will get a chance to sign two more bills to reduce taxes on employers. Will she show that she has learned an important lesson on economics and sign these important job creating bills, or will ideology again win out over proven results?
Greg Moore is New Hampshire director for Americans for Prosperity.